INTERNATIONAL TOBACCO CO. LTD., MUMBAI V. .JT.CIT (OSD)-2(2), MUMBAI

ITA 277/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83637 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 01-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 09-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMAR
• Assessee Lawyers: MANISH V SHAH
• Keywords: Depreciation; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 277/MUM/2013 ASSESSMENT YEAR: 2009-10 INTERNATIONAL TOBACCO CO. LTD C/O GODFREY PHILIPS INDIA LTD. V.K.K. MENON MARG ( SAHAR ROAD), CHAKALA, ANDHERI (E), MUMBAI-400 099 PAN: AAACI 3492 H VS. JCIT OSD CIR- 2(2) 545 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD MUMBAI- 400-020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MANISH V. SHAH REVENUE BY : SHRI SUMIT KUMAR DATE OF HEARING : 01.07.2014 DATE OF PRONOUNCEMENT : 28.08.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD.CIT(A) -5, MUMBAI DATED 25.10.2012 FOR THE ASSES SMENT YEAR 2009-10. 2. IN THIS APPEAL, THE ASSESSEE HAS AGITATED THE DE CISION OF THE LD.CIT(A) CONFIRMING THE ACTION OF THE AO IN DISALLOWING THE EXPENDITURE CLAIMED BY THE ASSESSEE ON REPAIRS AND MAINTENANCE OF BUILDING, PL ANT AND MACHINERY. 3. BRIEFLY STATED, DURING THE COURSE OF THE ASSESSM ENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAD DEBITED VARIOUS EXPENSES UNDE R THE HEAD REPAIRS AND MAINTENANCE OF BUILDING WHICH INCLUDED AN AMOUNT O F RS.7,78,200/- ON ACCOUNT OF RENOVATION OF GODOWN FLOOR. FURTHER, UNDER THE HEAD REPAIRS AND MAINTENANCE OF PLANT AND MACHINERY, THE ASSESSEE HAD DEBITED AN A MOUNT OF RS.11,26,818/- ON ACCOUNT OF THE EXPENDITURE INCURRED FOR REPLACEMENT OF SINTEX TANK WITH PIPELINE FOR ETP PLAINT, ETP WASTE WATER LINE FOR TOILETS AND W ATER TANKS, PLC SYSTEM FOR HLP PACKING MACHINE, ELECTRICAL, MECHANICAL SPARES COST AND SOFTWARE CHARGES FOR JET PACK BOXING MACHINE PLC AND REPLACEMENT OF WOODEN W ALLS OF CRS SILO WITH ITA NO. 277/MUM/2013 INTERNATIONAL TOBACCO CO. LTD ASSESSMENT YEAR: 2009-10 2 STAINLESS STEEL SHEETS. ACCORDING TO THE AO, THE SA ID EXPENSES CONFERRED ENDURING BENEFIT ON THE ASSESSEE AND HENCE THE AO TREATED TH E TOTAL IMPUGNED EXPENDITURE OF RS.30,74,928/- AS CAPITAL IN NATURE. IN THE PROCESS , THE AO, WHILE ALLOWING DEPRECIATION ON THE SAID EXPENDITURE, HAD DISALLOWE D THE CLAIM OF DEDUCTION OF THE EXPENDITURE. ON APPEAL, THE LD.CIT(A) UPHELD THE DI SALLOWANCE BY REITERATING THE REASONING OF THE AO THAT THE SAID EXPENDITURE WERE CAPITAL IN NATURE. AGGRIEVED BY THE IMPUGNED DECISION, THE ASSESSEE IS IN THE APPEA L BEFORE US. 4. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD, IT IS OBSERVED THAT THE TRIBUNAL IN THE ASSESSEES OWN CA SE, IN ITA NOS. 8389, 8467/MUM/2011 FOR THE A.Y. 2008-09, HAS DECIDED A S IMILAR EXPENDITURE ON ACCOUNT OF RENOVATION OF GODOWN FLOOR AS REVENUE IN NATURE. FOLLOWING THE SAID ORDER, WE ARE OF THE CONSIDERED OPINION THAT THE EXPENDITURE ON A CCOUNT OF REPLACEMENT AND MAINTENANCE ON BUILDING AMOUNTING TO RS.7,78,200/- HAS TO BE TREATED AS REVENUE EXPENDITURE AND THE ASSESSEE IS ENTITLED FOR THE CL AIM OF DEDUCTION. 4.1 ON THE ISSUE OF DISALLOWANCE OF REPAIRS AND MAI NTENANCE EXPENDITURE OF PLANT MACHINERY AMOUNTING TO RS.11,26,818/-, THE DETAILS OF THE EXPENDITURE DISALLOWED BY THE AUTHORITIES BELOW ARE EXTRACTED HERE UNDER:- A REPLACEMENT OF SINTEX TANK WITH PIPELINE FOR ETP P LANT RS.56,886/- B ETP WASTE WATER LINE FOR TOILETS & WATER TANKS 16 .09.2008 RS.131582/- C PLC SYSTEM FOR HLP PACKING MACHINE RS.100000/- D ELECTRICAL, MECHANICAL SPARES COST AND SOFTWARE C HARGES FOR JET PACK BOXING MACHINE PLC RS.300000/- E REPLACEMENT OF WOODEN WALLS OF CRS SILO WITH STAI NLESS STEEL SHEETS RS.358900/- F REPLACEMENT OF WOODEN WALLS OF CRS SILO WITH STAI NLESS STEEL SHEETS RS.17,94,50/- TOTAL RS.131582/- MORE THAN 180 DAYS, RS.995236/- LESS THAN 180 DAYS RS.1126818/- AS REGARDS THE EXPENDITURE INCURRED BY THE ASSESSEE ON ACCOUNT OF REPLACEMENT OF SINTEX TANK IN ETP PLANT AMOUNTING TO RS.56,886/-, IT IS RELEVANT TO STATE THAT THE TRIBUNAL, IN THE ASSESSEES OWN CASE (SUPRA) FOR TH E A.Y. 2008-09, HAS DECIDED A SIMILAR EXPENDITURE AS REVENUE IN NATURE AND THEREB Y ALLOWED THE CLAIM OF THE ASSESSEE. FOLLOWING THE SAID ORDER OF THE TRIBUNAL, WE DIRECT THE AO TO ALLOW THE EXPENDITURE INCURRED BY THE ASSESSEE ON ACCOUNT OF REPLACE OF SINTEX TANK IN ETP PLANT. AS REGARDS THE OTHER EXPENDITURE CLAIMED BY THE ASSESSEE ON ACCOUNT OF ITA NO. 277/MUM/2013 INTERNATIONAL TOBACCO CO. LTD ASSESSMENT YEAR: 2009-10 3 REPAIRS AND MAINTENANCE TO PLANT AND MACHINERY, AFT ER CONSIDERING THE NATURE OF THE EXPENDITURE INCURRED BY THE ASSESSEE AS AFOREMENTIO NED IN THE TABLE, WE ARE OF THE CONSIDERED VIEW THAT THE SAID EXPENDITURE DO NOT RE SULT IN ANY ENDURING BENEFIT TO THE ASSESSEE AS THE EXPENSES ARE PERIODICALLY NECES SARY FOR RUNNING THE BUSINESS OF THE ASSESEEE. THEREFORE, THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN TREATING THE SAME TO BE CAPITAL IN NATURE. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND DIRECT THE AO TO ALLOW THE EXPENDITURE CLAIMED BY T HE ASSESSEE AS REVENUE EXPENDITURE. RESULTANTLY, THE ADDITIONS SUSTAINED/M ADE BY THE LD.CIT(A)/AO STAND DELETED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF AUGUST, 2014. SD/- SD/- (N.K. BILLAIYA) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 28.08.2014 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR I BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.